A NY Daily News article by Richard Henry Lee looks over the Obama family's tax returns. In brief, the First Family's personal financial master plan in the 1996-2004 era resembles the business plan of the Underwear Gnomes on South Park. The Obama thinking appears to have been:

1. Borrow against home equity and consume. 2. 3. Get rich!

But, hey, it worked.

Lee writes:

A close examination of their finances shows that the Obamas were living off lines of credit along with other income for several years until 2005, when Obama's book royalties came through and Michelle received her 260% pay raise at the University of Chicago. This was also the year Obama started serving in the U.S. Senate.

During the presidential primary campaign, Michelle Obama complained how tough it was to make ends meet. During a stop in Ohio, she said, "I know we're spending - I added it up for the first time - we spend between the two kids, on extracurriculars outside the classroom, we're spending about $10,000 a year on piano and dance and sports supplements and so on and so forth."

Let's examine how tough things were for this couple using various public records.

In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.

Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250.

This means they spent perhaps $80,000 beyond their income from 1999 to 2004.

The Obamas' adjusted gross income averaged $257,000 from 2000 to 2004. This is above the threshold of $250,000 which Obama initially used as the definition of being "rich" for taxation purposes during last year's election campaign.

The Obama family apparently had little or no savings during this period since there was virtually no taxable interest shown on their tax returns.

In 2003, they reported almost $24,000 in child care expenses and, in 2004, about $23,000. They also paid about $3,400 in household employment taxes each year. And as Michelle stated, they spent $10,000 a year on "extracurriculars" for the children.

For example, even though the Book Money and Senator's Wife Money began pouring in in 2005 (about $3 million in 2005-2006), the Obamas didn't put any money into a tax sheltered SEP account until 2007. Their tax returns are bizarrely minimalistic-looking. Mine are littered with flotsam and jetsam from various investments: capital gains, capital losses dragged out over four years, interest from this or that. The Obamas' tax returns don't look very lived in.

For the sake of his political career, Obama had to live in the city, so they spent a fortune on private schools, private tutoring, etc. In contrast, most Chicago professional couples with small children move to an upscale suburb like Wilmette. There, you have to pay a fortune in property taxes, but you get outstanding public schools and the city park system takes care of all the dance lessons and so forth for nominal sums. Wilmette offers the Welfare State for people who can't afford the Welfare State, whereas Chicago is kind of an Ayn Rand region for upper middle class families where you are on your own to provide for yourselves.

Also, Mrs. Obama appears to have been higher maintenance than the typical wife — for example, she worked out with personal trainer four times per week (was that at the extra-expensive East Bank Club?).